6 Pros and Cons of Offshore Development You Need To Know
In recent years, offshore development service has attracted huge attention from many business runners. A severe shortage of programmers has significantly increased the hiring cost in many countries. The only way to expand the development team while cutting costs is by using offshore development services. Read on to discover the pros and cons of outsourcing service below.
1. Advantages of offshore service
1.1. Reduce the cost
Offshore development is a popular strategy for companies aiming to reduce costs while accessing a broad pool of talent. Although the cost of offshore development services has increased in recent years, they remain significantly more affordable compared to the rates in the United States and Western Europe. Countries such as Vietnam, India, and China offer a wealth of skilled IT professionals at comparatively low costs, making them attractive options for outsourcing.
For instance, research from Daxx reveals that developers based in the US and Western Europe typically charge between $60 and $200 per hour. In contrast, the hourly rates for software developers in Vietnam range from $10 to $25, highlighting a substantial cost advantage. This cost disparity allows companies to achieve significant savings on their development projects while still benefiting from high-quality work.
Furthermore, the lower cost of offshore development does not necessarily imply a compromise on quality. Many developers in these countries are highly skilled and experienced, often possessing expertise in cutting-edge technologies and methodologies. The competitive nature of the local job markets drives these professionals to maintain high standards and continuously improve their skills.
>>> Read more: Vietnam – The Ideal Place To Offshore Software Development
1.2. Access to Offshore Talents
Technology is rapidly evolving, driving a significant demand for IT expertise across various fields, including website and mobile app development, Big Data, Artificial Intelligence, Data Science, and DevOps engineering. As the tech landscape grows more complex, finding specialized IT professionals in your home country can become increasingly challenging. This is where offshore development teams can offer a compelling solution.
Turning to offshore development can be an excellent strategy when local talent pools are insufficient or when specific technical skills are scarce. Offshore development teams provide access to a larger and more diverse talent pool, enabling you to tap into a global network of skilled software professionals. This expanded access can be particularly advantageous for finding expertise in niche areas like advanced machine learning algorithms, scalable cloud infrastructure, or cutting-edge data analytics techniques.
1.3. Increase scalability
The product development process can get quite stressful along the way. Depending on each stage, it may require flexible staff arrangement. SMEs and startup owners can hire part-time employees and dismiss them when the project is done. However, there is the risk of part-time staff not getting along with the full-time team, or of time being lost during the “warm-up” period.
Outsourcing, on the other hand, benefits SMEs and startups by allowing employees to be adjusted in response to changing needs. Furthermore, the offshore team has already established a strong foundation of collaboration and understanding among its members.
1.4. Increase in productivity
An offshore software company has the resources and expertise to complete the tasks quickly. An in-house team may be dragged in to work on many multiple development tasks, where your dedicated agency can focus solely on delivering quality work within the promised timeframe.
Moreover, offshore software agencies have greater workforces than onshores companies for multiple reasons. Because software development companies in some countries have more skilled software engineers, they can easily hire more people to work on your project.
1.5. Concentrate on your own activities and plans
Software development typically requires substantial time and resources, which might detract from focusing on your core business objectives. For small and medium-sized enterprises (SMEs) and startups, the demands of software development can be particularly burdensome, diverting attention away from critical areas such as growth strategy and business operations.
Outsourcing software development to specialized agencies can be a strategic solution for these businesses. By delegating the development process to experienced professionals, SMEs and startups can redirect their focus to other important priorities. For instance, they can dedicate more effort to finding and engaging with angel investors who can provide crucial funding and strategic guidance.
Additionally, outsourcing allows businesses to concentrate on improving their operations and scaling their business effectively. Instead of managing the complexities of software development in-house, teams can focus on enhancing their operational processes, optimizing workflows, and driving innovation within their core business areas.
1.6. Good long term maintenance of applications
The cost of in-house software maintenance is often prohibitive for many businesses. Hiring a dedicated team of software engineers solely for the purpose of maintaining an application can be a significant financial burden, especially for smaller companies or startups with limited budgets. This is because the expenses associated with recruiting, training, and retaining skilled software engineers can quickly add up, and the ongoing salaries and benefits for a maintenance team can strain financial resources.
Outsourcing software maintenance offers a practical and cost-effective alternative. By leveraging offshore services, businesses can significantly reduce their maintenance costs. Offshore companies typically have access to a vast pool of software developers with a diverse range of skills and expertise. This means they can provide specialized maintenance support without the need for businesses to invest in a full-time, in-house team.
2. Disadvantages of offshore service
2.1. Time zone differences
When you offshore some parts of your business to another country, this is the first thing to keep in mind because different time zones could only add to the challenge. If you have a question or a problem regarding your project, it may be complicated to contact the person in charge of interacting with you. Your working hours may be in the middle of the night for them and you might have to wait an entire day to receive a response by email or other methods. In consequence, offshore development services necessitate time management and flexibility.
2.2. Cultural barriers
When it comes to teamwork, culture plays a significant role because people from various backgrounds have different attitudes and mindsets toward work and responsibility. Normal behaviors in one culture may be considered disrespectful in another, and vice versa. This can lead to some inconvenient situations and even unexpected conflicts.
Furthermore, the project manager must offer developers days off when their country has national holidays or festivals. For instance, while Christmas is the most important holiday in the United States and Europe, many Asian countries celebrate the Lunar New Year holiday as the biggest holiday of the year.
2.3. Communication hurdles
If you choose an offshore company in a country where English is not the primary language, communication can be challenging. Even though many offshore companies have leaders who can speak and understand English, communication issues may arise if they do not understand the nuances of the language.
There are multiple ways of communication such as instant message, email, video calls, virtual meetings. However, sometimes the important instructions and requirements are just being missed or happen at a slower and fragmented pace. As a result, what you want in some cases cannot be understood as its meaning.
2.4. Inconsistent quality
When utilizing an offshore service for software development, several potential issues can impact the quality of your project. One significant concern is the reliance on the offshore company to hire qualified developers. Since you have limited control over their hiring practices, there’s a risk that they might opt for the most affordable software engineers available, rather than the most skilled ones. This decision can directly affect the quality of your software.
2.5. Security risks
One of the primary concerns that all businesses have when dealing with third parties is information security. With an in-house team, there is less chance of information leaking outside of the company. You can also check the background of each new hire to eliminate the risk of information leakage. This is vitally important if your company’s success depends on being the first in the market.
As a result, before signing a contract with an offshore company, you should talk to your business team and develop guidelines and milestones to protect your data. Then, you can decide what information you can share with software providers and what information must be kept private.
2.6. Loss of complete control
Because you’ll be working with someone outside of your organization, you won’t be able to monitor and control the project as it progresses. Working with an off-site development team can be a significant change for some companies, but an experienced agency can assist in making the transition as smooth as possible.
3. Conclusion
Overall, while there are several pitfalls to choosing offshore development, it is still a reliable option for businesses of all sizes and industries. It is important to keep in mind necessary precautions while making full use of the benefits offshore development brings to your operation.
If you want to learn more about outsourcing and minimize the potential drawbacks, look no further than AgileTech. With a team of skilled and talented Software Developers and Designers from all over Vietnam, AgileTech confidently believes that we can bring the best software development services for our clients. Contact us today to find out how AgileTech can help you transform your business!